Accenture $17.6 million contract with Department of Home Affairs cut short

14 June 2018

A contract which Accenture Australia held with the Department of Home Affairs was terminated a year before the deadline, according to new information released in a report by the Australian National Audit Office. 

Ongoing revelations about the way the Department of Home Affairs reviews the efficiency of consulting work hasbrought to light the premature termination of an Accenture-held contract. 

The contract, worth $17.6 million, was held by Accenture for the portfolio reform task-force in relation to the merging of Border Protection and Australian Customs, and the Department of Immigration for the creation of the overarching Australian Border Force. 

The new US style super-department – akin to the American Department of Homeland Security – has come under increasing criticism recently for a high turnover of consultants and lack of oversight from the department itself. 

The merger of the two departments was citied as a major cost-cutting move for the government with the aim of eradicating cross-departmental bureaucracy and the double-up of duties. 

The purported savings however have been overshadowed by the blowout of spending on outsourcing. The department has been dealt a blow by the audit office report which highlighted the consultancy spend and the fact that the department only evaluated 6% of the contracts in relation to the merger, adding up to almost $1 billion in total.  

“With the creation of the Home Affairs portfolio ... the department’s information holdings will increase further,” the report stated. “Unless urgent and significant action is taken to address the record keeping problems and issues which have previously been repeatedly identified, the ANAO continues to consider that there is a risk to the department’s core functions.”

Accenture $17.6 million contract with Department of Home Affairs cut short

The Accenture contract was said to have been cut short by the department due to the fact that Border Force was not satisfied with the performance of the firm, according to the report. Both the firm and the department have denied the accusation, forwarding that the contract ended early due to the firm completing its obligated duties prior to the termination date.

An Accenture spokesperson said: “Due to contractual obligations we are not in a position to discuss our work with the Department of Home Affairs.” She continued by saying that the contract ended “due to the service no longer being required for the entire contract term. The services required were delivered prior to termination".

However, it was written within the report that the contract was terminated as the department was not satisfied with the performance of Accenture. The contract was “terminated for convenience on the 30 June 2015 at the end of the first of a two year contract. By that time, $17.1 million (97.1%) of the contract’s value had been paid,” the report stated. 

The Accenture contract was one of two contracts terminated, the second being a $2 million anonymous contract for management advisory services. According to the report, the audit department “found evidence that suggested that the department had not been satisfied with the performance of two consultancies [but] despite this, neither of these consultancies had been evaluated.”

Since the date of termination, Accenture have received an additional 21 contracts with the department worth over $20 million. The firm is currently involved in the bidding for an open tender to digitalise Australia’s visa application system which closes in July.  

Under the Federal Government’s plan, Australia’s outdated and manual visa system would receive an overhaul, seeing automation across a number of functions. The digital strategy and management consulting firm is an industry leader in automation and AI technologies and is a frontrunner for the multi-billion dollar project. 


Commonwealth Bank working with McKinsey on massive job cuts

16 April 2019

The Commonwealth Bank could be set to cut up to 10,000 jobs and around $2 billion in costs according to reports, with the bank working on the plan with McKinsey.

Driven by new CEO Matt Comyn, who was appointed to the helm last year, the Commonwealth Bank of Australia (CBA) is said to be mulling a plan devised in conjunction with global strategy and management firm McKinsey & Company to axe up to 10,000 local jobs – saving about $2 billion in operating costs. It continues the close relationship between the bank and the consultancy dating back for more than 15 years.

The largest employer among Australia’s Big Four banks, the potential cuts could see an almost 25 percent reduction to its approximate workforce of 44,000, the CBA’s headcount then dropping below the ~34,000-strong staff at National Bank. The plan is also reported to include the shuttering of 300 of its 1000 branches around the country, although as customers shift to online banking the closures are not unexpected.

“My understanding is that the story is good and there has been a plan underway,” said Your Money’s chief reporter Leo Shanahan of the reports which first surfaced in The Australian (Your Money was formed through a partnership between Nine and NewsCorp subsidiary Australia News Channel). With its potential ramifications for the government’s hopes in the upcoming federal election, the reporting from Murdoch’s stable provides an unexpected twist.

“Matt Comyn has been wanting to shut branches in particular for a while and cut costs at the bank. There is broadly a plan underway over the next few years for [this cost-cutting] to happen,” continued Shanahan on Comyn, who replaced former McKinsey New Zealand head and global partner Ian Narev as CEO last year following the anti-money laundering breeches which saw the bank fined a record $700 million.Commonwealth Bank working with McKinsey on massive job cutsComyn has since broadly criticised his predecessor at the recent Royal Commission into misconduct in the banking and financial services sector, which stemmed in part from a Four Corners report on the profit-at-all-costs culture within the CBA’s financial planning division, but the bank’s relationship with McKinsey apparently remains strong – having dated back to before Narev’s arrival and featuring other close links.

In 2003, the CBA brought in McKinsey for an ongoing “benchmarking” project to cut $500 million in costs – with 600 staff said to be in the retrenchment cross-hairs at the time following a significant reduction in the years prior. McKinsey has continued to serve the CBA in the years following, and had throughout the 80s and 90s advised all of the NAB, Westpac and the ANZ on various cost-cutting and re-organisational measures – including saving Westpac from potential collapse.

Meanwhile, CBA’s Group Executive for Retail Banking Angus Sullivan, who will be responsible for overseeing any strategy to close branches and let go customer facing staff, was like Narev a former partner in McKinsey’s New York office, spending nine years with the strategy firm before joining CBA in 2011. Former CFO Rob Jesudason is also among others a McKinsey alumnus, while the leadership team of the CBA’s strategy division continues to feature a number of ex-McKinsey consultants.

For the Commonwealth Bank’s part, it has described the reports of a mass redundancy – which The Australian contends were meant to be kept secret until after the election – as “unnecessarily alarming” and “misleading”, while reiterating the need to manage costs. McKinsey meanwhile traditionally refuses to comment on matters concerning its clients, although the firm recently committed to greater transparency following a series of its own public image issues.

The financial sector accounts for nearly a quarter of Australia’s $5 billion management consulting spend, with the Big Four professional services quartet Deloitte, PwC, KPMG and EY in recent years all scoring multi-million dollar contracts with the big Australian banks – particularly around the areas of digitisation. McKinsey, meanwhile, was last year brought in by Telstra on another $1 billion cost-cutting program.